With concern over global trade easing financial market participants have been moving more into stocks and out of bonds, creating some upward pressure on mortgage rates. At the end of the day, though, rates are still hovering around the tight range they’ve been in for several months now. Read on for more details.
Where are mortgage rates going?
Rates increase this week
Current mortgage rates have gradually moved higher this week. After several weeks of concern over the global trade war, financial market participants moved into the safe haven of government bonds.
For the past couple of weeks we have seen this trend reverse itself with investors beginning to take on more risk and push more money into stocks. So now we’re seeing demand for long-term Treasury yields move lower, sending yields higher.
The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) has ticked up about ten basis points since last Friday.
Mortgage rates typically move in the same direction as the 10-year yield so we’ve seen rates rise from the previous week. Here are the numbers from today’s Freddie Mac Primary Mortgage Market Survey (PMMS):
- The average rate on a 30-year fixed rate mortgage increase two basis points to 4.54% (0.5 points)
- The average rate on a 15-year fixed rate mortgage rose two basis points to 4.02% (0.4 points)
- The average rate on a 5-year adjustable rate mortgage remained flat at 3.87% (0.4 points)
Here is what the Freddie Mac Economic and Housing Research Group had to say about rates this week:
“Mortgage rates moved up slightly over the past week to their highest level since late June.
The next few months will be key for gauging the health of the housing market. Existing sales appear to have peaked, sales of newly built homes are slowing and unsold inventory is rising for the first time in three years.
Meanwhile, affordability pressures are increasingly a concern in many markets, as the combination of continuous price gains and higher mortgage rates appear to be giving more prospective buyers a pause. This is why new and existing-home sales are not breaking out this summer despite the healthy economy and labor market.”
Lock now before move even higher
Mortgage rates have increased the past couple of weeks. With the Federal Reserve expected to raise the nation’s benchmark interest rate over the coming months, it’s reasonable to expect that mortgage rates will rise as well. It therefore makes sense that if you’re going to buy a home or refinance your current mortgage, you should do so sooner rather than later.
Today’s economic data:
Durable Goods Orders
Durable goods orders in June rose 1.0% from the previous month. Durable goods minus transportation ticked up 0.4%. Core capital goods rose 0.6%.
International Trade in Goods
The nation’s trade deficit widened to $68.3 billion in June.
Applications filed for U.S. unemployment benefits came in at 217,000 for the week of 7/26/18. That puts the 4-week moving average at 218,000.
Notable events this week:
- Chicago Fed National Activity Index
- Existing Home Sales
- FHFA House Price Index
- PMI Composite Flash
- Richmond Fed Manufacturing Index
- New Home Sales
- EIA Petroleum Status Report
- Durable Goods Orders
- International Trade in Goods
- Jobless Claims
- Consumer Sentiment